Business Directories

Egypt expects Libya oil shipment in 2 weeks

Cairo, April 18, 2013

Egypt expects the first shipment of Libyan oil under a deal announced last month to arrive within two weeks, a source at the state importer told Reuters on Thursday, which should help ease energy shortages that have choked the economy.

Egypt announced last month it would begin importing 900,000 barrels of oil a month from Libya in April.

"We are negotiating now with Libya to choose the kind of crude that matches the Egyptian refineries," said an Egyptian General Petroleum Corporation (EGPC) official who spoke on condition of anonymity.

He said that after agreement is reached on the crude quality, Egypt expects to receive 600,000 barrels of oil in the first shipment from Libya within the next two weeks.

A senior Libyan oil industry source also told Reuters that the first shipment is expected later this month.

The Egyptian official did not give details on the price that Egypt will pay for the oil.

The chairman of the Libyan National Oil Company said last month that Libya will provide Egypt with crude at world prices.

Egypt's cash-strapped government spends a fifth of its budget subsidising petroleum products, which it sells to consumers at some of the lowest prices in the world.

Rising international oil prices and expanding domestic consumption have sent the subsidy bill soaring, and governments before and after the uprising which ousted former president Hosni Mubarak in 2011 have struggled to bring costs under control.

Egypt is under pressure to curb its subsidy bill to secure a $4.8 billion loan from the International Monetary Fund.

After nearly two weeks of negotiations in Cairo, the government and the IMF failed to agree on terms for the loan. Western diplomats said one of the main sticking points was the government's unwillingness to commit to implementing cuts in fuel subsidies, a key condition for IMF assistance to ease the country's deepening economic crisis.

Libya and Qatar stepped in to give Egypt a $5 billion boost last week. The new cash will buy the government time as it seeks to avert social unrest over fuel shortages and food prices increases during a long, hot summer.

Fuel shortages have led to long lines at petrol stations and rolling electricity blackouts and have sent farmers scrambling to find diesel to run their trucks, tractors and irrigation pumps.

Oil minister Osama Kamel told Reuters in an interview on Tuesday that fuel subsidies will cost Egypt more than EP120 billion ($17.41 billion) this financial year, which is above previous estimates. – Reuters